IoT platform market to be over $2.3B by 2021, says report

Market news | July 11, 2016

By Rich Pell

According to BCC Research, the global market for IoT platforms should grow from $629 million in 2016 to over $2.3 billion by 2021, reflecting a five-year compound annual growth rate (CAGR) of 30%. As a segment, the cloud SaaS (Software as a Service) and PaaS (Platform as a Service) market should reach $2.1 billion in 2021, up from $528.4 million in 2016 on a projected five-year CAGR of 31.5%. The on-premise market as a segment is expected to reach $100.6 million and $256.7 million in 2016 and 2021, respectively, on a five-year CAGR of 20.6%.

The global IoT platform market is expected to see a wider adoption of pure cloud-based SaaS and PaaS, barring industries where on-premise or private network-based deployments are necessary and preferred over cloud-based solutions. This trend will also benefit the revenue structure of these vendors with a higher long-term return compared to a one-time sale provided by the license-based revenue model.

An interesting trend shaping this segment is the growing interest of many of the larger IT service providers who view IoT platforms as high margin solutions that will generate a steady revenue stream through cloud-based, subscription revenue models. This has spurred a number of high value acquisitions in the past three years, and the recent Cisco-Jasper acquisition is expected to be a game changer for the IoT platforms market in 2017 and beyond.

Further, this segment of the IoT industry is seeing increased activity from many global mobile network operators for connectivity management platforms, as well as IT developers for application enablement platforms. The market has benefited from the combined effects of a strong lineup of new IoT platforms, a marketing push to educate IT decision makers on the scope of their platforms and a sustained demand for platforms in the enterprise and consumer applications segment. The growth potential, however, is highest for industrial IoT applications and platforms.

“In the past two years, the third-party IoT software platforms market has seen a strong thrust and wider adoption,” says BCC Research analyst Nandita Bhotika. “Vendors agree that the market for wireless IoT solutions has strong long-term growth prospects. They anticipate significant growth in the number and type of devices being wirelessly connected, driven by a number of enablers, such as lower wireless connectivity costs, faster wireless connection speeds, new devices and tools to simplify the development of IoT applications as well as increased focus and investment by large co-system players.”